The world is facing a recession, economic output in June 2020 quarter is going to shrink, and growth for FY21 will be sharply lower — these will take a toll on corporate earnings as well as stock prices.

Global financial markets that were cheerfully sailing on fair winds of liquidity, infused by global central banks, have been suddenly hit by a giant wave of selling that has sent prices crashing and left investors gasping for breath.

Markets worldwide have seen the biggest fall since 2008 in 2020 as an impact of the COVID 19 pandemic.

How bad is this COVID 19 impact? 

Nothing is clear for now, some feel this is the end of the world if it is there is nothing to worry right! Eventually, we all will die and there will be nothing left. But if not the end then right now the picture is not clear as to how much time the market is going to take. According to some experts, it might take 3 more months but as the behavior of the trigger, this time is not known we can’t say till when the market will regain itself.

Things are right now calming down in Asian countries where the virus started but the European countries are still facing a storm like situation due to the virus. The situation of Italy, Spain, and the US are still at the critical stage. India thankfully has not been hit that hard by the pandemic but the future is unknown we don’t know what we are yet to see.

The coming few weeks are very crucial, hopes are high that this viral pandemic will contain itself if the lockdown is implemented properly.

How will the market behave in this phase?

The market is at its lowest, as of 7^th April the market went down to 27% from its peak. This situation is very serious and this type of fall never happened in the past. So it’s hard to predict the behavior but for now, let’s assume that within the next 2-3 months the virus will be contained. So, in this phase, the stock market will be quite volatile.

The reason why this fall is happening is that no business predicted the whole world will be locked down so businesses didn’t know how to behave. This storm is going to crush all the businesses who are in a lot of debt and have poor cash flows. The first to get hit and also for the longest is the tourism industry.

Now, what all of this mean for the investors? 

You need to have patience, as good companies are not going to be affected much. And the current cheap stock prices are just a COVID impact and this phase will pass soon. Post the COVID 19, companies are going to recover quickly. This phase is a good time to invest though. Plan wisely and put your money in good companies.

Don’t plan on stopping your SIP’s as right now you are getting more and more units stored for you.

Happy Investing!

Mutual fund is subject to market risk please read offer related document carefully before investing.